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Virginia on Track to Increase Sales Tax


 Virginia's transportation system could get needed sales tax revenue.

UPDATE 4.8.13: Governor McDonnell has signed HB 2313 into law as Chapter 766. It will take effect on July 1, 2013.

Earlier this month, Virginia lawmakers approved Governor Robert F. McDonnell’s (R) Transportation Plan, as amended. On March 25, the governor recommended changes to HB 2313 as passed by the House and the Senate. His recommendation now awaits review by the House.

The measure would increase the state sales and use tax from 4% to 4.3%, pursuant to HB 2313. The additional sales tax revenue would fund the Highway Maintenance and Operating Fund, the Intercity Passenger Rail Operating and Capital Fund, and the Commonwealth Mass Transit Fund. In addition, the tax on sales of motor vehicles would increase from 3% to 4.3% over a four-year period.

The share of existing general sales and use tax revenue used for transportation would increase from 0.5% to 0.675%, over a period of four years. Again, additional revenue would go toward the Highway Maintenance and Operating Fund.

The bill would also eliminate the $0.175 per gallon tax on motor fuels. That would be replaced with a percentage-based tax: 3.5% for gasoline and 6% for diesel fuel. The bill allows for a 2.5% tax refund for diesel fuel purchased for vehicles with a gross vehicle weight of 10,000 pounds or less.

0.125% of existing sales and use tax revenue would be allocated to public education under the measure.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.